- WHAT ARE THE TAX IMPLICATIONS OF SELLING MY ESPP SHARES?
The tax treatment of the sale of shares acquired under your ESPP will differ depending on the timing of your sale of shares. If shares are sold more than two years from the first day of the offering period and one year from the purchase date, the sale is considered a Qualifying Disposition and a gain is taxable in two parts. When you sell the stock, any discount that you received when you bought the stock is generally considered additional compensation that you have to pay taxes on as ordinary income. Any further gain may be considered long-term capital gain. Shares sold within two years from the beginning of the offering period, and one year from the purchase date, are considered Disqualifying Dispositions. When a disqualifying disposition occurs, the difference between the Fair Market Value on the purchase date and the purchase price is treated as ordinary income on your W-2 in the year of the sale. You should contact your tax advisor if you have any questions about the tax implications of selling your ESPP shares.
- WHO CAN I CONTACT WITH ADDITIONAL QUESTIONS?
Please contact the Morgan Stanley Service Center toll-free at 1-800-367-7444 (U.S. participants) or 1-801-617-7414 (non-U.S. participants).
Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for legal matters.